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Home arrow Marketing arrow Welfare Markets in Europe: The Democratic Challenge of European Integration

The Triumph of 'TINA'

Chapters 3-5 in this book have showed that contentious debates exist where there is not only a high salience of a particular issue, but also where democratic debate relies on conflicting discourses and frames articulated by opposed coalitions in order to make sense of political events. The lack of contestation in the face of the weakening or dismantling of the welfare state (including welfare services) in many EU countries is rooted in the nature of the discourse which has prevailed in the Eurocrisis. This discourse is rooted in a striking paradox: instead of transnational left-right conflict lines, the crisis has been mainly framed as a matter of national debt, thus articulating conflicting national identities and interests; at the same time, however, the policy responses to the crisis advocated by the powerful EU countries and the EU institutions have been legitimized through austerity discourses which are similar beyond borders. The paradox is only apparent, though, if we think that national leaders have sought to talk to the people but also to the markets (Schmidt 2014). With regard to welfare services, the outcome is that the promoted neoliberal austerity favours cutting public expenditure over increasing revenue in order for states to control their deficits and debts. With public expenditure being the main problem, it is therefore only logical that cuts in welfare services appear as an inevitable solution for tackling the debt(s). Since the outbreak of the crisis, the German Chancellor, Angela Merkel, has embodied the power relations embedded in this straightforward justificatory discourse, which can be summarized in one motto: ‘there is no alternative’ to austerity.

A starting point for the paradox identified is that the politics of the crisis have been only very weakly articulated in terms of left and right. Instead of a transnational ideology-based debate, we have witnessed the emergence of a consensus on austerity and neoliberal policy responses. In the initial period of crisis management in 2008-2009, the bankruptcy of Lehman Brothers and the major turmoil which it provoked in the global economy led many voices to question the effective and moral foundations of global financial capitalism, its disconnection from ‘the real economy’, and the disastrous consequences of recurring crashes. In this first period, the Occupy movement and many left-wing movements and parties framed identities on a transnational class cleavage: taxpayers versus the banks, the 99 % versus the 1 % of powerful wealthy. Movements and unions claimed ‘we won’t pay for their crisis’. As several scholars have noted, though, as the crisis unfolded in Europe, in a second sequence from 2010 onwards, the shared diagnosis which emerged thereafter as the dominant interpretation displays a striking reversal of the causal unfolding of events: while public debt skyrocketed due to the rescue of the financial sector by national governments, the excessive levels of public debt have then been designated as the main cause for the European debt crisis (Blyth 2013; Fitoussi and Saraceno 2013). In fact, the deep roots of the crisis were to be found in the malfunctioning of the global and European banking system, cheap loans, housing bubbles and the deficiencies of economic governance in the Eurozone. Thus, as Blyth put it, European governments were ‘twelve-months Keynesians’ as they have re-capitalized major banks with tax payers’ money. But from 2010 onwards, the Greek case provided the opportunity for a turn to austerity. While Greece was an outlier regarding the dubious management of public finance and the amount of loans granted by foreign banks, the question of the bailout brought about a framing of the crisis which not only shifted the blame on government spending, but also led to a renationalization of identities: politicians and the media only spoke about the Greek debt, the Irish debt, the Portuguese debt and the like. This was facilitated by the fact that, indeed, high levels of debt had different causes in various countries. Paradoxically again, this was ignored as all highly indebted countries were labelled with the infamous acronym PIIGS (standing for Portugal, Italy, Ireland, Greece, Spain). National framing has been reinforced by media coverage, which has forcefully echoed the manifestations of hostility among the peoples of Europe, the most striking being the representations of Angela Merkel as a Nazi in Southern Europe. More generally, national framing is encouraged by the structurally fragmented public sphere in Europe where, if the salience of European issues has increased over time, the ways in which they are framed remain contrasted from one country to the other. Thus, the transnational functional (or class-based) cleavage opposing Keynesians to neoliberals was turned into a cleavage opposing creditor states versus indebted states (Maatsch 2014). This, in turn, has heavily served to reinforce a political and cultural cleavage between North and South. Thus, with regard to the causes of the problem, the transnational dimension has been downplayed, and policy problems as well as identities have been mainly articulated along national lines.

Regarding policy solutions, on the other hand, austerity has clearly developed not only as a homogeneous policy solution (‘one austerity fits all’), but also as a justificatory discourse with characteristics shared beyond national borders. In the ‘European core’, this has occurred through a relative convergence between French Keynesianism and German ordoliberalism (Crespy and Schmidt 2014) towards the common frame of ‘stability’, which entails ‘sound’ public finance. Although without linkage to the common currency, the crisis in British politics has been mainly framed as a ‘crisis of debt’ with similar implications regarding budgetary and fiscal discipline (Hay 2013). In the periphery, austerity plans have been legitimized through discourses which have emphasized the inevitability of the adopted measures. Studying justification discourses of the Italian and Spanish governments, Borriello (2014) shows how leaders, in their speeches, naturalize the economy in ways which appeals to common sense. The medical metaphor, for example, has been widely used: the economy is attacked by a disease (toxic assets) and needs a diagnosis and a treatment which may be painful but will eventually provide oxygen and make the economy healthy again and so on. A geological metaphor is used in a similar vein. All these discourses have contributed to the supremacy of the austerity discourse by feeding the idea that ‘there is no alternative’. Thus, the austerity discourse is highly problematic from a democratic point of view because it tends to abolish politics, that is, the (contentious) debating of collective choices.

A specific diagnosis, that is the interpretation of the causes of the crisis, is necessarily prescriptive in that it implies a certain set of solutions. As far as welfare services are concerned, the focus on debt and detrimental public spending as the main problem was only likely to reinforce the idea that inefficient welfare services have become too costly for European countries which need to improve their competitiveness in the globalized economy. Far from being new, as we have seen in the beginning of this chapter, this idea was already present since the inception of the EMU in the early 1990s. Against this backdrop, a main discursive device has been strengthened and has served as a conceptual bridge between austerity and cuts in welfare services: that of ‘structural reforms’. While a very catch-all term, the meaning of structural reforms involved three main aspects: the liberalization of markets, the last bastion being services markets; the flexi- bilization of labour markets; and the reducing of public spending in the realm of social policy in particular, and the reduction of tax on business as a source of revenue (Lebaron 2014). Welfare services are being affected by all of these three dimensions: on the one hand, they should be liberalized and—totally or partly—privatized; on the other hand, public funding to welfare services should be cut.

Eventually, the final consequence of this logical chain of policy prescriptions is that, if public resources have become insufficient for ensuring the continuity of welfare services, further marketization should be a main alternative. This is evident in the discourse articulated by the European Commission in its policy documents. In its communication on social SGI from 2006, it claims that social services are not for profit. But at the same time, they are seen as a main area of economic activity.

Social services constitute a booming sector, in terms of both economic growth and job creation. They are also the subject of an intensive quest for quality and effectiveness. All the Member States have embarked upon modernization of their social services to tackle the tensions between universality, quality and financial sustainability. (European Commission 2006c, p. 5)

With the theme of modernization, the stress is put on cost-effectiveness:

At a time when public authorities are confronted with the need for fiscal consolidation, it is essential to ensure that right framework is in place so that high-quality services can be provided as efficiently and cost-effectively as possible. (European Commission 2011a)

As mentioned earlier in this chapter, the focus on fiscal discipline has made social investment illusory. But it should be underlined that the EU Commission does not conceive of social investment solely (or primarily?) as public investment. Modernization goes hand in hand with marketization as the role of private actors should be enhanced, as explained in the package on social investment from 2013:

Resources for social policies are not limited to those from the public sector.

A non-negligible part comes from people and families. In addition, nonprofit organisations provide social services on a substantial scale. These range from homeless shelters, support for the elderly, people with disabili?ties, to advice centres on social benefits in general. Social enterprises can complement public sector efforts, and be pioneers in developing new markets, but they need more support than they are receiving now. The for- profit parts of the private sector would need to be further encouraged to use the potential of social investment through, for instance, a healthy and secure social and working environment. This is not limited to Corporate Social Responsibility alone and includes for example on the job training, in-house childcare facilities, health promotion and accessible and family- friendly workplaces. (European Commission 2013b, p. 5)

It is also striking that the Commission stresses the role of the not-for- profit sector. This implies to promote a logic of charity over a logic of institutionalized welfare state. However, in many instances not-for-profit organizations in the social sector are dependent on public funding in one way or another: it is, therefore, fallacious to envisage that they would take on more tasks in a period of austerity.

 
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